Published
March 27, 2025
The MetLife & U.S. Chamber of Commerce Small Business Index for Q1 2025 fell to 62.3 this quarter from 69.1, falling back in line with where sentiment stood one year ago as small business owners reported lower levels of business health and cash flow.
Notably, concern for inflation reached a new high with 58% reporting it as a top concern this quarter, while concern about revenue increased 10 percentage points to 35%.
According to the results of the survey (conducted January 28–February 14), two in three small businesses (66%) say they are comfortable with their cash flow, down six points from last quarter (72%). Confidence in business health has also gone down slightly (63% this quarter, down from 67%).
“Honestly there is confusion right now as to what is happening with the local economy, and I am not comfortable as a business owner,” said Michelle Mekky, founder and president of Mekky Media Relations in Chicago and a member of the U.S. Chamber’s Small Business Council. “We saw sales holding before the election and then it picked back up, but things have started to slow a bit with customers holding back on spending.”
Inflation: A Persistent Challenge Reaches a Record High
A new record (58%) of small business owners cite inflation as a top challenge this quarter, reflecting the ongoing impact of rising costs on business operations.
“The data is clear, confidence is being shaken as small businesses increasingly worry about their revenue while at the same time confronting the possibility that tariffs will raise costs for them and their employees,” said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. “But while measures related to revenue and cash flow dipped, other underlying indicators such as hiring plans, investment plans, and overall confidence in the economy remain strong.”
In an interview, Austan Goolsbee, president and CEO of the Federal Reserve Bank of Chicago, and a member of the Federal Open Market Committee, which sets federal interest rates, said that growing inflation expectations are a “major red flag” for the economy.
“If you start seeing market-based long-run inflation expectations start behaving the way these [consumer] surveys have done in the last two months, I would view that as a major red flag area of concern,” he said.
Many small businesses have spoken up about their concerns over tariffs and how those added costs, on top of persistent inflation, might impact their ability to remain competitive and profitable.
Following the release of the Q1 SBI data, Axios reported that the Index is “a sign of just how much tariff worries are weighing on the business world right now.”
The latest SBI data also indicates that more than one in three (35%) small business owners are now concerned about revenue, an increase of 10 percentage points since last quarter. This marks the highest level of concern over revenue since tracking of this issue began in Q3 2021.
Despite these challenges, views of the U.S. economy and local economies have remained stable, suggesting that while individual businesses may be struggling, there is still a broader sense of economic resilience.
Many Plan to Hire Despite Uncertainty
While just 20% of small businesses reported increasing staff over the past year, many remain hopeful about future hiring prospects, with 37% expecting to increase staff in the coming year, despite uncertainty and inflationary headwinds.
This optimism is particularly strong in the manufacturing sector, where 56% of businesses plan to expand their workforce.
The Q1 2025 survey also asked small business owners about their views on workforce readiness, finding that small business owners are especially eager to hire entry level workers with leadership skills and AI certification.
For more findings from this quarter, and to explore and browse years of small business data, click here.
About the authors
Thaddeus Swanek
Thaddeus is a senior writer and editor with the U.S. Chamber of Commerce's strategic communications team.
